Strangling in the Fiscal space set by imperialism

The current Fine Gael government fought the 2016 election on a very simple message. Recovery! The recession was over and the good times had come. The figures back them up. 5% growth - no! 26% growth - throw in the Apple billions - 10000 % growth!!!

Now Michael Noonan has a different story. We should wise up and forget all the numbers thrown up by the trans-national companies. We don't tax them - we pay all the bills! The budget will be based on the subordinate and very modest growth in the domestic economy and on the need to keep paying for the banks and bondholders.

If the health of the Irish economy was somewhat exaggerated, so also the strength of the European economy. Brexit, Italian collapse, Greece, the weakness of the euro. All these mean it is better to be safe than sorry and press down on austerity. Anyone who thought austerity would end with recovery should think again – Squeezing the workers in the interests of imperialism and their local al-lies is a permanent condition.

Narrow ground

The trade unions are yet again sponsoring street protest to bolster horse trading around the budget. They will be joined at the table by opposition parties, charities and social groups. They will argue for a more generous allocation of funds. Charges and taxes should be cut, public services expanded.

Yet the battle will yet again be fought on the narrow ground of the fiscal space allowed by the Troika. The difference between a tight and a generous budget is cast in this space of €1 billion, to be divided 1/3 tax cuts, 2/3 services.

What that figure translates to is unending hardship. Water charges? USC? Housing? Health? Wages? Only one can be fitted into the fiscal space.

Squaring the circle

One way to square the circle within capitalism is to tax the transnational companies. However, following the Apple debacle we now know that the policy of all the major capitalist parties is not to tax the transnationals and to hand the money back if it is forced on them.

The parties are expressing the interests of Irish capitalism. They act as agents for imperialism, legislate to meet their needs and take every opportunity to steal a little extra for themselves. Under successive governments Irish workers have taken responsibility for 42% of European banking debt while scheme after scheme was produced to ensure low taxes or no taxes for the transnationals.

Irish workers paid the banking tax and subsidised the giant corporations. That was no problem of Irish capitalists - they have steadily enriched themselves throughout the cri-sis. At the same time the absence of alternative has cut the ground from under the opposition to such an extent that opinion polls show a majority for appealing the Apple ruling. This is a grim fact but it tells us the magnitude of the task before us.

The magic number is 12.5?

What about the “left” call to enforce the 12.5% tax rate? While a bigger tax take would be welcome, there are a number of problems with this approach:

It is still a massive subsidy of the transnationals.

The logic of tax subsidy is race to the bottom - Sinn Fein support 12.5% in Dublin but have extended that to Belfast is to support a big drop in the North which has to be taken from the welfare budget. Britain has just cut its rate. The last Fine Gael/Labour coalition has a 6% cut dressed as a knowledge tax, Should Ireland cut further? Very quickly we find ourselves at square one, cutting zero tax deals.

The basic problem is that, although transnationals produce an influx of capital, their basic day to day role is to extract capital. Taxes and laws operate in their interests and the native economy shrinks.

Finally, the role of transnationals changes with time. A lot of manufacture has been outsourced to the global south, to be replaced by money laundering and a tax haven status for Ireland. National resources and services are being transferred to international capital. The number of local jobs falls while the parasitic relationship between the Irish state and the giant companies increases.

Alternative

What would an alternative look like? There many forms of relationship with transnationals other than giving them everything you have and then giving some more. Denmark and China, for example, set fairly high tax rates but, more importantly, insist that their own representatives are present at every stage of the production process. The point is that they have a perspective of developing a native economy that can eventually replace the transnationals.

Because of their client status such a plan is beyond Irish capital. A plan for an Irish economy is also a plan for workers revolution and workers control of industry and resources.

That is a challenging perspective. The imperialist powers would set out to intimidate us and we would need to quickly find allies among other oppressed groups. How-ever the alternative is for Ireland to be transformed into a desert – growing concentration of wealth among a tiny fraction of the population, mass homelessness alongside vampire sell-off of property, resources and services, col-lapse of public services and a standard of living in free-fall.

The fate of Syriza in Greece shows the weakness of trying to reform European capital. With an anti-imperialist and socialist programme we could find genuine unity and build something beyond a small presence in the Dail and temporary explosions of anger.